Cost of living crisis: the government must help the poorest

In the spring of last year Stephen White, chief executive of the Yorkshire Building Society, and his colleagues were deeply worried by what they were seeing and hearing on the ground across their branch network. They were picking up more and more stories from customers, and others in their communities, about the huge leap in the number of people who were struggling to make ends meet.  

This was still mid-pandemic. The mood was gloomy. People were losing their jobs. Many others – particularly in the hospitality and retail businesses – were either being laid off or not getting money from furlough or other welfare benefits. Others simply needed help with sorting out their finances.  

White and his team did their research and came up with a plan. They made contact with Citizens Advice, the charity which provides free help to those with legal or financial problems, to see whether they could work together to provide direct advice more effectively to YSB’s customers as well as others in the community. 

The up-shot of their plan is that today 18 of Yorkshire Building Society’s 231 branches have CA’s advisers taking space in their offices. Hosted and funded by YSB, the bureaus are open to anyone with difficulties to discuss anything from legal to debt problems face-to-face and free with volunteers.

White tells me that the pilot scheme which started with six branches has gone so well they have launched another 12 with CA spaces in YSB’s network in towns across Yorkshire and the North including those in Leeds, Halifax, Doncaster, Sheffield and Barnsley. 

So far 530 people have taken up their services with 64 of CA’s clients standing to gain £500,000 in income they were owed, or didn’t know they could claim. That’s an amazing result – around £7.5k gained per head – and comes from all sorts of sources including welfare benefits and Universal Credit but also compensation and grants from tribunals and legal disputes. 

As you can imagine, White is over the moon with the result of the partnership. He plans to extend the scheme to other branches, and for traffic to increase dramatically this year as the cost of living crisis continues to rise and bills continue to bite. 

How depressing. Yet the signs are that White is right: those facing fuel stress – already estimated at around five million people – is only going to increase as the latest April energy hike comes into effect. 

At Citizens Advice they are preparing for a flood of people needing help, not just with energy costs but council tax debts. In March alone, CA’s advisers saw 314,000 people in England and Wales. Just think about that – it’s the equivalent to the population of a city the size of Nottingham needing help. 

Records were again broken – for the third month running – for the number of those CA describes as needing ‘crisis support’ which means advisers send them to food banks or other charitable support because there is nothing more they can do. 

More than 26, 500 people were placed on this crisis support in March, up by nearly a half on the previous month. One blackspot is Blackpool where a growing number are suffering from what the CA describes as ‘multiple deprivation.’ 

What’s more, Citizens Advice reckons April is going to be far worse. The charity’s latest research shows that around five million people will be unable to pay their energy bills from April onwards despite the various bits of government support.

It also predicts this number will almost triple – to one in 4 – or over 14 million, when the price cap goes up again in October. That sounds a horrendous number but the CA’s 23,000 trained volunteers are constantly reporting back on what they see on the ground from the 2,500 locations they work across in England and Wales. 

And, as well as their experience in YSB branches, CA’s volunteers really do see how those on low to medium incomes are struggling as they work from pop-up services in supermarkets to mobile buses touring the regions. It also has a partnership with NatWest’s call centres which referred more than 2,100 people to CA in the last 18 months. 

What is becoming increasingly apparent is that the North is suffering badly, partly because so many homes are badly built and insulated but also because incomes are low. 

Life is so tough for so many that the Citizens Advice Mid-North Yorkshire, contracted by North Yorkshire County Council, works with Warm & Well, a local partnership drawing on private and public backing, to help reduce the number of cold homes and cold deaths but also to advise on mental health issues for those in need across the region. 

Based in Northallerton – in Chancellor Rishi Sunak’s constituency – Warm & Well has front-line advisers who visit the local towns by bus and are now reporting back that an alarming number of people are in a heat or eat situation. They are having to ration fuel or have had their emergency prepayment meter run out when they are at least a week away from their next benefit payment. Many are now facing fuel bills of over £2000 a year.

What is not going to help these individuals – particularly come October – is the sticking plaster from the Chancellor’s Household Support Fund and the one-off £200 loan for energy bills. As economists at the Resolution Foundation point out in a recent paper, Stressed Out, a third of households will be in fuel stress should the October price cap hit £2,500 per year with 4-in-5 of the poorest households spending a tenth of their budgets on energy bills

If the price cap goes up in October and fuel prices continue shooting up, the annual bill could be £2,500. This would tip a third of all households  – 7.5 million families in England – into fuel stress, even with the Chancellor’s measures.

These are extraordinary numbers, and the sheer scale of the problems highlighted by Citizens Advice and other charities should concern us all as they will have a ripple impact throughout society. In 21st century Britain, it’s even more astonishing that there are so many people who face having to choose between heat and eat. From the evidence, albeit anecdotal, these are not individuals who are spending on the latest mobile phone or other gadgets. These are people enduring real hardship.

Was Martin Lewis, the money savings expert, right when he warned that “civil unrest isn’t far away”? His comments may have been stretched a little to make gripping headlines but Lewis was most certainly accurate when he said that lower to middle income earners have nothing left to cut back on. 

More pertinently, what can be done? Private initiatives like those that Yorkshire’s White has launched with Citizens Advice are to be lauded and hopefully other businesses will look to do more to help their employees, and their communities over the coming months. 

Government can’t be expected to solve all these problems, although one of the many reasons why energy bills are so high – and homes so difficult to heat – is the result of previous cack-handed policy on not doing enough to build up energy capacity and allowing poorly built housing stock. 

Nor should ministers be allowed to get away with blaming the pandemic, supply chain shortages or, most egregiously of all, the war in Ukraine, for rising bills: our fuel costs are so high because successive governments failed to invest in long-term energy supplies to build self-sufficiency and security into the grid. 

Here’s an example: imagine how Blackpool and the Lancashire region could have been transformed with new skilled jobs and training if fracking had been allowed years ago. Or if previous governments had gone ahead with building more nuclear power plants – an area where British engineers were leading the field – in some of the less affluent areas of the country.

But that’s the past. For now, prices continue to rise, there is only one solution available to help the less well off over the next year or so. The Chancellor is going to have to dig deep into the coffers and come up with more energy discounts – not loans – come the autumn. 

If Sunak needs further persuasion, he should – once he is back from his Easter holiday in Santa Monica – take a bus tour with Warm & Well and listen to his less well-off constituents.